Proxy use in VSE for 2.79
I believe having the same issue.

I'm new to VSE so I tried different setting in the proxy panel (resolution, timecode) and Proxy playback still not working.

Checked the Proxy footages generated by Blender and it look ok when playing on VLC.

Then tried with Blender2.78c on Mac OS10.9 which work normally.

Hope it would help.



Update 2017.11.05

Tried the Latest Build blender-2.79.0-01a3c95609 from https://builder.blender.org/download/ .
Import movie to VSE, and create proxy. Just work normally. The playback problem seems fixed.